Assume that you have $330,000 invested in a stock that is returning 11.50%,$170,000 invested in a stock that is returning 22.75%,and $470,000 invested in a stock that is returning 10.25%.What is the expected return of your portfolio?
A) 15.6%
B) 12.9%
C) 18.3%
D) 14.8%

Question

Quizplus · Accepted Answer

We can calculate the expected return of the portfolio by weighting the returns of each stock based on their respective investments:

Expected return = (0.5 x 11.50%) + (0.25 x 22.75%) + (0.25 x 10.25%)
Expected return = 5.75% + 5.6875% + 2.5625%
Expected return = 14.00%

Therefore, the expected return of the portfolio is 14%, which is closest to option B (12.9%).

Assume That You Have $330,000 Invested in a Stock That